Interest rate surge to boost big bank profits past $16b

“Earnings are still going up, but margins are coming under pressure and I think the bigger concern is the outlook from here,” Joshi said.

Credit Suisse analyst Jarrod Martin said margins and credit quality would be the key issues for investors, though he did not expect a significant rise in bad debts yet. “I think we need to wait probably another three months or so before we really start to see the impact from the rapid increases in rates,” he said.

Consensus estimates cited by Citi have NAB delivering $4.16 billion in cash earnings on Thursday; ANZ reporting $3.8 billion in earnings on Friday; and Westpac reporting $3.8 billion in net profit on Monday next week.

Commonwealth Bank, which operates on a different financial year to rivals, made record half-year earnings of $5.15 billion in February and will provide a quarterly trading update next week. Macquarie is expected to report about $5 billion in full-year profits on Friday.

UBS analyst John Storey titled his note on the upcoming results The Last Hurrah, saying bank results this earning seas were likely to be “close to peak profit.” He also highlighted sources of pressure including the stiff competition in mortgages and potential for higher bad debt charges.

Citi analyst Brendan Sproules said he thought the results would show better-than-expected asset quality, and he thought net interest margins would not fall as sharply in the coming period as many expect.

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“We think that while NIMs have peaked, they will likely defy downward expectations and plateau in coming halves. Coupled with asset quality that takes longer to deteriorate, it points to more resilient earnings in coming periods, and we think that will be the key focus this reporting season,” Sproules.

The Australian bank results follow strong recent results from some large US banks, defying the market fears sparked by Silicon Valley Bank’s failure in March.

However, instability in the US regional banks re-surfaced at the weekend, with regulators reportedly seeking bids for stricken San Francisco-based First Republic Bank, following a plunge in investor confidence and an exodus of deposits.